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Alliance Boots acquires Farmacias Ahumada with retail pharmacy operations in Mexico and Chile

BY Michael Johnsen

ZUG, Switzerland — Alliance Boots on Tuesday announced that it has signed an agreement to acquire Farmacias Ahumada.

“This acquisition will give Alliance Boots a major presence in the attractive Latin American market, one of our priority areas for investment," stated Stefano Pessina, Alliance Boots executive chairman. "It is also a further step towards reaching a truly global footprint. The well-positioned retail pharmacy businesses of Farmacias Ahumada and Farmacias Benavides will be great additions to our Group’s unique portfolio of retail, product and service brands around the world. We are confident in the high potential for sustainable growth and value generation that will be unlocked by this acquisition, including the opportunity for consumers in Mexico and Chile to access for the first time leading Boots product brands, such as our renowned skincare and cosmetics ranges.”

The acquisition comprises two main businesses, which together operate more than 1,400 stores, with combined revenues of around $1.4 billion. Farmacias Benavides is the third largest retail pharmacy chain in Mexico with around 1,000 stores, and Farmacias Ahumada is one of the three largest retail pharmacy chains in Chile with around 400 stores.

The transaction, which is subject to regulatory approvals, is expected to complete in the third quarter of 2014.

 

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Bayer, Merck enter into a strategic pharma collaboration in the area of cardiovascular diseases

BY Michael Johnsen

LEVERKUSEN, Germany — In a related transaction to Tuesday morning’s acquisition of Merck’s OTC portfolio, Bayer also agreed to enter into a strategic pharma collaboration in the area of cardiovascular diseases with a focus on sGC modulation. 

There remains high medical need due to various diseases such as certain forms of pulmonary hypertension or heart failure. Novel modulators of the sGC pathway may have the potential to address this need. However, major development efforts and clinical programs are required to fully explore the benefits of these novel compounds. This collaboration brings together two leading companies in this field.

“Merck’s expertise and global presence in the cardiovascular therapeutic area make it a collaboration party of choice for our sGC programs,” stated Bayer CEO Marijn Dekkers. “We truly believe that this collaboration increases our chances of bringing new medicines to more patients, in line with Bayer’s mission ‘Science For A Better Life’”.

“We are now joining forces in the area of sGC modulation to implement a joint development and commercialization collaboration that allows both companies to better explore the medical potential of the novel sGC modulators,” commented Merck’s chairman and CEO Kenneth Frazier. 

The collaboration includes Adempas (riociguat), which is already approved for the treatment of certain classifications of pulmonary hypertension and is being developed in additional life cycle indications, as well as vericiguat, an investigational compound that is currently being developed in two Phase IIb studies in worsening chronic heart failure. Furthermore, the parties agreed that sGC modulators presently in earlier stages of research and development may be included in the collaboration.

Bayer and Merck will equally share costs and profits from the sGC modulators and implement a joint development and commercialization strategy. Bayer will lead the commercialization for Adempas in the Americas while Merck will lead the commercialization outside the Americas. For vericiguat and other potential investigational sGC modulators, Bayer will lead the commercialization outside the Americas while Merck will lead the commercialization in the Americas. Both companies will have the option to co-promote Adempas and the follow-on sGC modulators in each others’ territories. “This collaboration demonstrates our commitment to sGC modulators, allowing us to better explore the potential of these promising cardiovascular compounds,” Brandicourt said. 

Merck will make payments to Bayer of up to $2.1 billion, comprising an up-front payment of $1 billion and sales milestone payments of up to $1.1 billion related to future collective sales of certain collaboration compounds including Adempas. 

 

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Bayer acquires Merck’s OTC portfolio for $14.2 billion

BY Michael Johnsen

LEVERKUSEN, Germany — Bayer on Tuesday agreed to acquire the consumer care business of U.S. pharmaceutical company Merck for a purchase price of $14.2 billion. 

“This acquisition marks a major milestone on our path toward global leadership in the attractive nonprescription medicines business," stated Bayer CEO Marijn Dekkers. “At the same time we are leveraging our capabilities in the cardiovascular therapeutic area.” In a related transaction, Bayer has entered into a global co-development and co-commercialization agreement with Merck in the field of soluble guanylate cyclase modulators, for which Merck will make an up-front payment to Bayer of $1 billion, with substantial additional sales milestone payments.

The OTC acquisition will give Bayer the global No. 2 position in nonprescription products following recently announced consolidations in this growing healthcare industry segment, and will significantly enhance Bayer’s business across multiple therapeutic categories and geographies. Merck's consumer care business includes leading such brands as Claritin, Coppertone and Dr. Scholl’s. Pro forma sales of the combined businesses in 2013 amounted to $7.4 billion with Merck’s business contributing approximately $2.2 billion. “We are adding significant scope and earnings power to a business that is already delivering strong margins and stable cash flows,” added Dekkers. 

“With this transaction, we are acquiring leading product brands that will make Bayer the OTC leader in North America and Latin America and also move us into top global positions in key OTC product categories,” said Olivier Brandicourt, CEO of Bayer HealthCare. “The strong Bayer brand will help to further leverage the already successful product brands worldwide. We expect particularly strong growth in key countries outside the U.S. where our superior commercial presence will drive sales of the combined business.” 

Upon completion of the acquisition, Bayer is expected to achieve global leadership positions in dermatology and gastrointestinals and advance to the No. 2 position in the cold, allergy, sinus and flu category. Bayer will remain No. 2 in nutritionals and No. 3 in analgesics.

The purchase price of $14.2 billion includes a payment associated with sales of Claritin and Afrin in certain countries where these products are still prescription-only. The purchase price represents a 2013 pro forma EBITDA multiple of 21x. 

In 2013, Merck’s consumer care business generated approximately 70% of its sales in the US, where it also holds leading brand positions. The business is primarily comprised of products in the cold, allergy, sinus & flu, dermatology (including sun care), foot health and gastrointestinal categories. The most important brands are Claritin (allergy), Coppertone (sun care), Dr. Scholl's (foot health), MiraLax (gastrointestinal) and Afrin (cold). 

The merged business is to be headquartered at the Bayer site in Whippany, N.J. 

 

 

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